The breakdown of price of Terra's LUNA and algorithmic stablecoin TerraUSD (UST) has created a shock in the whole crypto market all around the globe. Many common people and financial backers experienced some serious misfortunes when $40 billion in LUNA and UST's price went down within a time span of a few days. Do Kwon, CEO of Terraform Labs, is surrounded by all the bitterness and also some legal issues started encompassing him. Looks like a lot of trouble is waiting for him and it's a difficult time of his life.
The crypto market experienced the first crypto bank run in history just recently when both Terra's LUNA and UST prices crashed, clearing out around $39.2 billion in market within a few days. UST, Terra's algorithmic stablecoin, experienced a de-peg, losing its $1 equality. Moreover, Terra's token LUNA dove from $77 to $0.000001 which was a very shocking experience for the investors.
While these things were going on, another news came out just recently that the US Securities and Exchange Commission found Terraform Lab's pioneer Do Kwon involved in some money laundering activities, getting the company in even more trouble.The agency has likewise started a probe into Terraform Labs' token Luna's unexpected crash
A South Korean news organization and the South Korean Television network had prior revealed that something seems very fishy at Terraform Labs however nobody paid attention to it and thus this situation that we all are facing right now occurred.
The Securities and Exchange Commission of the United States has allegedly uncovered proof of illegal activities against Do Kwon. The proof features 100 billion Won ( which is around $80 million) from the monthly expenses of the company that were distributed between numerous crypto wallets. The assets were moved a couple of months before Terra crashed.
Moreover, Do Kwon is under investigation by the Securities and Exchange Commission for purportedly disregarding the Securities Act by utilizing a blockchain service to make it simpler to get US securities through Terra.
Do Kwon apparently looks like he is avoiding these rumors as they simply add to the aggravation of every individual who has lost his investment. But the crypto market has turn out to be quite unforgiving since the Terra crash which brought about misfortunes worth $40 billion. Do Kwon and his team's mishandling has been called out by many crypto experts. However, the latest rumors about money withdrawal just before the crash has increased the mass probe towards him.
As per the Korean National Tax Service, Do Kwon is as of now being scrutinized for tax avoidance after LUNA and UST crashed due to a corporate and personal taxation rate of $78.4 million. Korean media's DigitalToday has acquired archives from the South Korean Supreme Court Registry Office that uncover Kwon chose to break down Terra's Seoul and Busan branches during its general meetings that took place on April 30. Following the decision of Do Kwon, the Busan branch was liquidated on May 4 and similarly the Seoul branch on May 5. So, let's just wait and watch how this case will turn out in the future.
Crypto coins have been on the rise and exploding ever since they were created. Every year a lot of coins are seen to explode and trend over the market via various platforms. Every year, people's needs and requirements change, and whichever coin in that year is the best suited for the people's requirements, explodes. The requirements of the population are not the only thing the explosion of a coin is dependent on. Never seen before features, something completely innovative and different is also what leads to the explosion of a coin.
Here are some predictions for which coin is most likely to explode in 2022:
Ethereum
Ethereum is one of the most dominating cryptocurrencies today. Ethereum does not require you to have any assets to use the platform as an online bank. It has developed a smart contract functionality, which increases your security with the added benefit that your transactions are guaranteed. It does not require you to reveal a lot of your details, just the basic ones. It was also one of the platforms to launch computer-based and mobile-based apps.
Solana
Solana aims to solve the three main blockchain problems- providing a decentralized platform, security and scalability. It is a serious competitor of Ethereum on the rise. Solana also charges a lower fee and has lesser congestion relatively because it processes fifty thousand transactions per second. It is one of the fastest cryptocurrencies. Its quick and easy way of transactions is what attracts its users.
Terra
Terra is one of the most innovative cryptocurrencies to exist. It imposes a unique way of taking care of the volatility problem of the cryptocurrency trade, without losing its profit-making ability. Terra is known to be a programmable cryptocurrency that is attractive to a lot of its users.
Cardano
Cardamon is a third-generational blockchain. It aims to combine developing technologies to provide its users with more security and stability and to become globally sustainable as it is a proof-of-stake blockchain, This cryptocurrency proves to be better than other cryptocurrencies in areas such as scalability, interoperability, and regulatory compliance. It is also one of the biggest cryptocurrencies by market cap. Like Ethereum, it also has a smart contract functionality that provides security and guarantee transactions. Cardano also has a crypto consensus mechanism called proof-of-work which ensures that a user’s money is not spent twice.
Uniswap
Uniswap is a decentralized application on the Ethereum network. This cryptocurrency does not use a traditional order book, rather it employs an automated market-making system. Since it runs on the Ethereum network, it also applies a smart contract functionality to its transactions. The main aim of the creation of this cryptocurrency was to make the buying and selling of assets easier, which it has succeeded in doing. It is known to be a low-risk and high-reward investment which makes it very appealing and attractive to its users. Its blockchain runs on open-source software. Uniswap also serves as a liquidity pool in an attempt to create better markets.
Cryptocurrency investments are one of the most popular ways of investing these days. Should you have an idea of which coin is most likely to explode in 2022 and choose the right cryptocurrency to invest in, it is sure to reap huge benefits. But investments of any kind are always a risky opportunity, thus there is no sure way of telling what can happen. Although predictions can be made, no one knows what's to come.
If you are an old crypto investor or trader then you can understand that the rise and decline in crypto assets is normal and it happens occasionally. However, recently the crypto market crash has resulted in high-speed decline of crypto assets causing damage to many investors and traders.
If we go deep into this crash then we can see that the price of Bitcoin plunged to its lowest point since 2020. The large cryptocurrency exchange i.e. Coinbase, tanked in value. The collapse of cryptocurrency that promoted itself as a stable means of exchange and not just this, more than $300 billion was eliminated by this crash in cryptocurrency prices causing a huge decline in overall crypto assets.
The amount of panic created in people due to the price of Terra going 100% down is also the alleged reason for this market crash. The declining rate of the crypto assets that was seen in the start of May was compared to the market crash of 2018 by the people. According to the recent histories of market crashes, we have seen that the recovery takes some time. It can take a few months to get back where it was recently.
Popular Crypto assets and their high-speed of decline:
One of the most popular crypto currencies i.e. Bitcoin was also seen going down. The reason was that Terra crashed. According to the news, the founder of Terra tried saving it from crash by selling Bitcoin worth millions of dollars which was also the reason that we have the high-speed decline of this asset.
Another popular asset i.e., Ethereum was also seen going down. It went less than $2000 and is still below 2k and not yet recovered. Not just this, a cornerstone of the cryptocurrency ecosystem and the world’s biggest stablecoin, Tether, slipped away from its $1 peg that further resulted in the intensified worries during the 2022 crypto market crash. Stablecoins are supposed to be a relatively safe haven in the otherwise highly volatile crypto markets. They are kept stable by being pegged to other assets including fiat money like the dollar and tangible assets like gold or through an algorithm. But, the recently experienced decline has caused major trust issues in most of the people. Solana, on the other hand, has also reached its lowest price of 2022.
A lot of people have lost trust and interest in crypto assets after watching the horrible drop down of the most popular crypto assets. Not just this, but the newcomers in the crypto world who lost their investments decided to take their steps back from the crypto world. A few countries were even seen imposing a ban on crypto currencies due to the 2022 market crash. However, the experts and old bees know that these things keep on happening in the crypto market and we need to cope up with them.
We don’t have any clear idea about how long this crypto’s collapse might last. A lot of crypto assets prices have typically rebounded from major losses, though in some cases it can take from several months to years in restoration or to reach at the highest point.
TerraUSD (UST) is the cryptographic algorithmic stablecoin of the Terra blockchain. Since it is a stablecoin, its value is soft pegged to the US dollar. In May of 2022, the crypto coin lost its peg to the fiat currency and unfortunately crashed, resulting in the further crash of the cryptocurrency market.
TerraUSD (UST) was one of the most-watched and followed stablecoin in the cryptocurrency market. Its crash caused an unexpected shock to many investors.
UST’s price fell well below 0.1 US dollar. Not only did it lose its peg, but it also started a domino effect where the prices of other cryptocurrencies fell, eventually resulting in a market crash. Not even the largest coins of the cryptocurrency market such as Bitcoin and Ether survived. TerraUSD (UST) is currently priced at 0.030471 US dollars. It is quite understandable that the fall of UST was quite grave.
Along with UST, fell LUNA. LUNA and UST had an interdependent relationship. For every crypto coin of UST minted, one crypto token of LUNA had to be burnt through. They were burnt and minted in the 1:1 ratio, to maintain balance and stability.
Ever since the fall of TerraUSD (UST), Terraform Labs (the owner of the Terra blockchain and ecosystem) has tried to come up with foolproof plans that will help restore TerraUSD (UST) to its former price and status as an algorithmic stablecoin and repeat it to the US dollar.
A certain developer from Terraform Labs tweeted the proposal that fully collateralizing Terra USD (UST) and implementing new mechanisms would help to redeem its value along with LUNA’s value. Although the developer shared no details about how this proposal would be implemented, many people speculated it to be a great idea that could return UST to its former price, i.e., the way it used to be before the crash took place.
The same developer also seemed to suggest that the idea of Terraform Labs giving up and ending the control of the Terra ecosystem was a topic of interest that had a positive response, thus it was under consideration. The idea was presented to preserve and salvage whatever was left of the Terra Ecosystem and rebuild it in a correct and foolproof manner that won't crash again.
The relationship between LUNA and UST was essential to keep the stablecoin (UST) pegged to the US dollar. The effect of unloading UST at prevailing prices was done to increase the supply of the LUNA tokens by a great amount, which would eventually result in the price of that token going down and falling, thus again.
One of the Terra Validators also declared that a quorum of validators took the effort to halt the entire network to avoid a 'decimal crisis' which had been occurring due to the extreme devaluation of LUNA.
Recent resourceful websites that report on the happenings of the market have uploaded that the number of LUNA tokens in circulation has gone up from 1.46 billion to 7 trillion.
Thus we can say that the effect of unloading UST at prevailing prices has been positive. Terra developers seem to continue this new policy. To get the Terra ecosystem to function at its full capacity, developers are pursuing the option of creating a new blockchain altogether. The implementation of this idea is the effect of unloading UST at prevailing prices. Although it is quite a while before Terra can be rebuilt again, investors are hoping that these small steps will help in the big picture.
Today Cryptocurrency has become a breaking topic to discuss anywhere the price of bitcoin recently reached 50,000 on the other hand various payment platforms including PayPal square and bid pay are now accepting payments in several cryptocurrencies including bitcoin investors are now putting more money in cryptocurrencies and it also becomes easier to trade them on established platforms and they have their coins as well cryptocurrencies are highly volatile and are not accepted everywhere.
BUILDING TRUST IN CRYPTOCURRENCY IS STILL NOT EASY
Now it's time to discuss some of the disadvantages of this digital currency. Illegal activities such as cryptocurrency transactions are highly secure, it is hard for the government to track down a particular user by their wallet address let me tell you that cybercriminals have often used BTC as a mode of exchanging money and various illegal deals such as purchasing drugs on the dark web furthermore some people use cryptocurrencies to convert their illicitly obtained money immediately to hide the source volatility while investing money in cryptocurrency comes with the potential of high return the crypto market is highly volatile and you might end up experiencing great losses as well why because the value of the coins can change widely in a short period.
Moreover, various issues like hacking incidents can result in losses and tax implications it is worth noting that the IRS has suggested that virtual currency transactions are taxable by law this means that if you are a taxpayer you will have to report crypto transactions while filing your tax return. However, it is not yet clear that how the taxpayer can report the value and what they have to pay as taxes.
Data loss results in financial loss you already know that the developers aim to create source code that is virtually untraceable impenetrable authentication protocols and strong hacking defense have made it safer to put your money in cryptocurrencies.
However if you somehow lose your private key to the wallet you can not get it back without the private key, your wallet will remain locked and you cannot take coins out of it this will eventually result in financial loss.
TYPES OF CRYPTOCURRENCY SCAMS
SOCIAL ENGINEERING SCAMS
In this type of scam, the scammer uses manipulation as a tool and deceit vital information of users' accounts. In these scams people think that they are dealing with trusted agencies, government officials, tech support. The scammer takes time and gains the trust of potential victims so that they can get vital information.
ROMANCE SCAMS
The scammer uses dating platforms to fool the victim. They create a fake long-term relationship with the victim so that they can get the confidence and after that fool the victim.
IMPOSTER AND GIVEAWAY SCAMS
Scammer fool by pretending to be a famous influencer, celebrity, business person. To capture the target victim then they promise to multiply the cryptocurrencies sent to them in what is known as giveaway scams. The messages are so well written that people are easily fooled.
PHISHING SCAMS
Scammers are interested in crypto wallet private keys, these are the keys that are required to access funds.
BLACKMAIL SCAMS
Scammers blackmail target victims by giving mails, they claim to have records of adult websites by that they threaten the victim to expose their private keys unless they share the information.
CONCLUSION
Today cryptocurrency is no doubt an excellent platform for investors but unfortunately cryptocurrency has its pros and cons. If people want to do safer investments they should do their research. For instance, Grauer shared that every Defi project should have a code audit available to make investors feel safer.
